Beazer Homes USA (NYSE:BZH), Atlanta, on Monday reported a profit of $5.3 million for its fiscal second quarter ended March 31, the company's third consecutive profitable quarter.

The gain was due primarily to a $53.6 million gain related to a partial exchange of junior subordinated notes. Income from continuing operations was $6.2 million, or $0.10 per diluted share, including non-cash pre-tax charges of $10.2 million for inventory impairments and an $8.8 million impairment from an unconsolidated joint venture.

For the comparable quarter in fiscal 2009, Beazer reported a loss from continuing operations of $108.7 million (-$2.81 per share), including non-cash pre-tax charges of $42.9 million for inventory impairments and $8.3 million of unconsolidated joint venture investment impairments.

The gain beat Wall Street expectations for a loss of 62 cents a share by a wide margin.

Revenue was up 6.2% to $198.2 million compared to the 2009 quarter as closings from continuing operations rose 5.6% to 852 homes. Beazer did not report average prices.

New orders from continuing operations were up 48.8% to 1,673 homes. The cancellation rate improved to 17.6% from 26.9% in the first quarter of 2010 and 29.8% in the second quarter of 2009.

Backlog was up to 1,781 from 1,278 in last year's quarter; dollar value of backlog was up to$394.5 million from $296.3 million.

Gross profit margin was 13.1% (18.3% minus impairments and abandonments), compared to -11.9% (11.1% without impairments and abandonments) in the 2009 quarter. SG&A was down 32.3% to $44.8 million.

The Company controlled 29,764 lots at March 31, 2010 (83% owned and 17% controlled), including 733 owned lots in discontinued operations. Total controlled lots of 29,764 reflect a reduction of 13.5% from the level at March 31, 2009 and 2.9% from the level at September 30, 2009.

As of March 31, unsold finished homes totaled 244, a decline of 35.6% from the level a year ago.

Beazer received a federal income tax refund of approximately $101 million, which was recorded the prior quarter, during the second quarter and ended with cash and cash equivalents of $567.7 million, including restricted cash of $43.3 million. It listed $1.35 billion in debt on its balance sheet, down from $148 billion as of Sept. 30, 2009.

Beazer continued the work of restructuring of its debt on Monday by announcing plans to issue a variety of new debt in the form of stock, tangible equity borrowings that are comprised of stock purchase contracts and senior amortizing notes due in 2013, and $300 million in senor unsecured notes due in 2018.The offerings are expected to cover the issuance of 12.5 million shares of the company stock and 3 million tangible equity units.

The company said it plans to use the net proceeds from the offerings, if completed, to fund or replenish cash used to repurchase debt, including redeeming the company's $303.6 million in 8 3/8% senor notes due in 2012, $154.5 million of 4 5/8 senior convertible notes due 202, and for general corporate purposes.

As previously reported, on January 12, 2010, Beazer closed its concurrent public offerings of 22,425,000 shares of its common stock and $57.5 million of mandatory convertible subordinated notes, and used a portion of the proceeds from the offerings to repurchase debt including our outstanding2011 senior notes at par. Net proceeds of these transactions, after the debt repayment (including accrued interest) were approximately $24 million. In addition, on January 15, the company completed a partial exchange of $75 million of outstanding junior subordinated notes and recorded a $53.6 million gain related to this transaction during the quarter.

"We have been encouraged by the early signs of improvement in our business, which started in the September 2009 quarter and have continued since," said Ian J. McCarthy, president and CEO. "We recognize both the signs of improvement and the continued risks to a broad-based housing recovery, but we expect to see gradual improvement over time and we believe we are taking the right steps to position the Company to benefit from improving conditions in the years ahead."

Shares of Beazer closed up 4.7% at $6.88 Monday but fell back 3% to $6.67 in after-market trading.